Sri Lanka faces huge daily cost from tobacco, tax revenue drops

With World No Tobacco Day approaching, a new study reveals that Sri Lankans spend a staggering Rs. 520 million on cigarettes every day.

The Alcohol and Drug Information Centre (ADIC) shared this information at a recent press conference, highlighting the severe health and economic impact of smoking. In 2019 alone, the costs linked to smoking reached Rs. 214 billion.

According to a 2020 survey, 3.2 million Sri Lankans use tobacco daily, and tobacco causes 20,000 premature deaths each year in the country. Beyond health, tobacco harms the environment. Around 1.8 billion plastic cigarette filters are improperly discarded in Sri Lanka annually, releasing 7,000 toxic chemicals into our ecosystems.

The ADIC also pointed out a major problem with cigarette taxes. Due to poor tax collection, the government’s tax income from cigarettes dropped by Rs. 9.4 billion in 2024. This money, instead of going to the government, became profit for the cigarette makers.

Dr. Ananda Rathnayake, chairperson of the National Authority on Tobacco and Alcohol (NATA), disagreed with the idea that lower cigarette taxes prevent smuggling. He stated, “people think that reducing the tax on cigarettes may lead to more smuggling of cigarettes which is absolutely not true.”

Another concern raised by ADIC is that the tax on cigarettes is only 67 to 69 percent of the price. This is below the World Health Organization’s suggestion of 75 percent. Even though cigarette sales have gone down by 54 percent in the last ten years, the Ceylon Tobacco Company’s profit after tax has jumped by 179 percent.

Research from Verite Research shows that taxes on most products have more than doubled since the economic crisis, but for cigarettes, taxes have actually decreased. The research suggests that cigarettes might be the only product where the government’s tax income has fallen in 2024, while the companies selling them made more money.

ADIC announced that steps are being taken to fix these problems. They are proposing new rules, including banning the sale of single cigarettes and stopping tobacco sales to anyone born after 2010.

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